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DEALING WITH DIFFICULT TENANTS

For a property investor, having tenants in place is the life-blood of any investment and minimising the loss of rent is paramount for the investment to perform well. With the view of reducing outgoings and maximising returns, some opt to self-manage their tenants; however this can be a risky and potentially costly affair if not handled properly.

Prevention is the best cure

There are key steps that should be undertaken in order to minimise the risk of ending up with difficult tenants and consequent loss of return. These steps will always be taken by your real estate agent or property manager, should you choose to work with one.

> Screen potential tenants by checking references, employment, and family status
> Check the ‘bad tenants register’ (e.g. www.veda.com.au, www.tenacybureau.com.au), remembering that even tenants with ‘good’ references can be listed
> Ensure that a proper tenancy agreement is signed and in place
> Ensure that bond money is lodged with the Bond Board; failure to do so is a breach and could give the tenant leverage in case of any future disagreements
> Perform a complete condition report of the property (with photos) to be signed off by the tenant prior to rental commencement
> Ensure that suitable insurance is in place for your property (note that this usually requires proper tenancy agreements and reports in order to cover your asset).

If you are not intimately familiar with any of these processes or how to go about completing them, it may be worth considering using a property manager. Not only will this offer you the assurance and peace of mind that all of the above and more are professionally managed.

What to do if you have a difficult tenant

If your tenants are causing difficulties, it is important that the situation is managed calmly and professionally. If your tenant communications become fraught or angry then the escalation will only end up harming both parties. A good manager should always:

> Communicate calmly and retain records of all communications
> Issue reminders and eviction warnings in writing and to the correct terms of the agreement if the tenant is in arrears on rent
> Record any damages with photographs and detailed descriptions, and then get professional quotes for repairs
> Understand the rights of both the landlord and the tenant
> Try to achieve an amicable resolution to disputes, even if that involves the tenant moving out. While the Tenancy Tribunal can be of great assistance in resolving any major issues, the process tends to be lengthy and often favours tenants. A drawn-out situation during which the tenant may continue avoiding paying rent, will ultimately result in more loss of income from your property. Incentivising the tenant to move out through rent relief or return of bond moneys can sometimes be the better and cheaper option.

If you are already dealing with a difficult tenant it is often worth talking to your local property manager to see if they can help in any way. In most cases, even if they do not manage your property, they can offer valuable advice and support.
Overall, to ensure that your investment is professionally managed, tenants appropriately screened, and solid tenancy agreements are put in place, it is always recommended that you talk to an experienced property manager or real estate agent about what they can do for you and your property.